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District Leader Report: Small Businesses

Democratic District Leader Kim Moscaritolo offers a special report on the plight of small businesses in our community. The following piece was also posted on Medium.

In 2019 I foundedYorkville Buy Local, a group focused on promoting and protecting our small businesses. At the time, I knew many of our small businesses were struggling, but I couldn’t have predicted the current situation they now find themselves in, through no fault of their own. Businesses that were already operating on extremely thin margins have now lost most, or in some cases all, of their revenue, and have had to lay off thousands of workers.

Times are especially tough for owners whose establishments don’t qualify as essential businesses and have been forced to completely shutter. Sara Patterson, owner ofEarthworks NYC, is concerned about what will happen if the shutdown continues. “COVID-19 is scary enough without the worry and fear of taking out a loan to cover costs and then not have the business recover quickly enough to afford the loan,” she said. “This is not a road I am eager to go down.”

Even businesses that were deemed essential still face major challenges.Chez Nick, on York Avenue, had just celebrated its grand opening a few weeks before the governor ordered the shutdown. “We have had some pretty good support from our direct neighbors since we have started this, but we didn’t have too much time to gain any real ground” said Robert Little, the owner.

In response to the COVID-19 pandemic, theNYC Hospitality Alliancereleased a number of recommendations to help bars and restaurants grappling with the crisis. For starters, we need to demand that insurance companies honor their business interruption policies, which the companies absurdly claim do not apply to the COVID-19 shutdown. We also need the federal government to extend the date by which small businesses can hire back their employees, so as not to force these businesses to incur greater debt.

And at a time when many people are ordering food and drink deliveries, we must also cap fees charged by third party companies, such as Seamless and Grubhub, at no more than 10 percent. Even in the best of times restaurants often lose money on deliveries. In the current climate these fees could drive many restaurants out of business.

Once the worst of the crisis abates, small businesses will still need a lot of help to recover and thrive. Moving forward, there are several ways we can assist these businesses.

We need to eliminate unnecessary bureaucracy. Regulations are important, and necessary to protect consumers, but many small business owners are overwhelmed by red tape. We need to reform the letter grade system issued by the city health department to allow time for small business owners to address certain violations before receiving a grade. We also need to streamline the permit and licensing process, and provide more resources for prospective small businesses owners.

We must protect small businesses from rising costs.Areportissued by the New York City Comptroller in September of 2019 found that between 2007 and 2017, “retail rents rose by 22 percent on average citywide.” It also found that rising rents were directly correlated with empty retail space.

City officials should negotiate deals with real estate developers that require a certain amount of retail space be set aside for small businesses. We also need to pass theSmall Business Jobs Survival Act, which would require building owners to renegotiate commercial leases in good faith. Finally, we need to reform the Commercial Rent Tax, which imposes a 3.9% tax only on businesses in Manhattan below 96th Street.

Many small businesses were already struggling before the COVID-19 crisis. It’s heartbreaking to imagine how many of our beloved local stores and restaurants may not return. We must do everything we can to help them through this crisis, and to help them to succeed in the years to come.